Exam 11: Behind the Supply Curve: Inputs and Costs

If your firm is operating in the negatively sloped portion of a long-run average total cost curve, then your production exhibits:

Use the following to answer questions: Figure: A Firm's Cost Curves -(Figure: A Firm's Cost Curves) Look at the figure A Firm's Cost Curves. The curve labeled V represents the firm's _____ cost curve.

The short-run average total cost curve is -shaped because at low output levels the spreading effect of falling average fixed costs dominates the diminishing returns effect, while at high output levels the reverse is true.

Lauren has 11 people working in her tangerine grove. The marginal product of the eleventh worker is 13 bushels of tangerines. If she hires a twelfth worker, the marginal product of that worker will be:

Use the following to answer questions: -(Table: Costs of Birthday Cakes) Look at the table Costs of Birthday Cakes. Assume that fixed costs are $10. What is the average variable cost of 4 cakes?

A firm that is able to use its inputs more efficiently as it increases production in the long run best demonstrates:

Use the following to answer questions: -(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases three mixers and bakes 100 cakes per day, what is her average fixed cost?

Think about running a restaurant. Probably:

Use the following to answer questions: -(Table: Cakes) Look at the table Cakes. Pat is opening a bakery to make and sell special birthday cakes. She is trying to decide how many mixers to purchase. Her estimated fixed and average variable costs if she purchases one, two, or three mixers are shown in the table. Assume that average variable costs do not vary with the quantity of output. If Pat purchases one mixer, her average total cost _____ in the range of output between 100 and 400 cakes.

When a firm adds physical capital, in the short run fixed costs will:

With one input fixed, a firm will find that as it attempts to produce more, the total product curve increases at a decreasing rate and its marginal product curve is:

A business produces 10 pairs of eyeglasses. It incurs $30 in average variable cost and $5 in average fixed cost. The average total cost of producing 10 pairs of eyeglasses is:

Use the following to answer questions: -(Table: Tonya's Production Function for Apples) Look at the table Tonya's Production Function for Apples. As she hires more labor, Tonya's production function shows that the number of apples picked increases at a decreasing rate because of:

Use the following to answer questions: -(Table: Costs of Birthday Cakes) Look at the table Costs of Birthday Cakes. Assume that fixed costs are $10. What is the average variable cost of 5 cakes?

The long-run average total cost curve shows the relationship between output and the average total cost when fixed cost has been chosen to minimize average total cost for each level of output.

Use the following to answer questions: -(Figure: Marginal Product of Labor) Look at the figure The Marginal Product of Labor. The total product of labor for five workers is _____ bushels.

Use the following to answer questions: -(Table: Costs of Producing Bagels) Look at the table Cost of Producing Bagels. The marginal cost of producing the sixth bagel is:

Marginal cost is the change in _____ cost resulting from a one-unit change in _____.

A _____ is an organization that produces goods or services for sale.

It is common in large breweries for the long-run average total cost to decline as output increases. This indicates that many breweries operate with: